History is pregnant with lessons that African leaders should, once and for all, take leaf out of these lessons and perhaps turn a blind eye to economic growth hypotheses and economic development policies that never worked to rid the continent of its socioeconomic-ills. A simple strategic insight and taking a thorough stock of the current geopolitical shift and sway them to benefit Africa may be the right medicine at the right time. Lessons of how developed countries leaped out of critical junctures and historical contingencies when they were in the state of development are in abundance. Acemoglu and Robinsons, in their seminal book "Why Nations Fail" trace critical junctures from the fourteenth century outbreak of the bubonic plaque, the Black Death in 1346 to the England political revolution of 1688, the Glorious Revolution. They demostrate without any mathematical or complex economic model of how these critical junctures correlates to sustainable economic growth and prosperity. A critical juncture is a major confluence of factors disrupting the existing economic or political balance in society.
African leaders should therefore take advantage of the current critical juncture which i call, "the Meltdown of the West" and create political and economic institutions that will change this continent for good. While i am infatuated with the African continent as my mother land with my superficial understanding of economics as a science, i am of the view that Africa has always presented opportunities and always destined to be a market frontier at some point. That time is now! The current allure of the continent by global capitalists is a consequence of what is happening in Europe and North America. That is my gut feel. Had these two developed group of nations and others kept their pace of economic triumph, perhaps Africa would not be in the radar. It sounds negative and pessimistic but the upside is that all countries that are now in the developed state took advantage of a particular critical juncture and turn that event into their advantage. This can also be traced from the invention of colonialism. Nations that reacted with a set of solid institutions when their colonial masters settled in their land, created institutions that propelled them to sustainable economic growth and prosperity over a long period of time. The beginning and end of colonialism bore interesting history that African politicians should heed strategic lessons out of instead of reacting with the vengeance and anger.
All eyes are now on Africa and her people. With my little understanding of economic development, it does not require one to be an economist to realize that the touted lucrative African middles class and the population estimated to hit a billion in less than a decade is an allure of the capitalists. This market is elusive unless there's critical investment on infrastructure across all social spheres (roads, water, energy, rail) and education. This is one investment that will leap the African continent from what is currently perceived as a challenging continent to do business in despite its recorded remarkable performance in GDP terms for the past decade. This is an investment that will create jobs,enable urbanization, increase living standards, alleviate poverty and thus create a consumer class that will spend its share of wallet on white goods and other consumables and consumer goods. This is where the over 300 million current middle class as outlined in the African Development Bank report in 2010, will "really" be in the middle with the purchasing power that qualifies it to be a sophisticated consumer class.
However, this dream is elusive unless African leaders, create inclusive political and economic institutions that will propel sustainable economic growth and prosperity. The infrastructure investment referred to earlier is the core focus of Africa at this juncture, from the oil discoveries in East Africa, untapped gas reserves in Mozambique and West Africa and rail, renewable energy in South Africa among and abundant untapped mineral resources in the DRC and Angola among others. Judging from the policy developments and implementation thereof across the African nations, these investments are all ring-fenced into the "political economy" almost in every country that is embarking on them. While the economic and political intentions are correct, my gut feel and personal view is that this political economic intervention is set to create political and economic institutions that are extractive in nature and not inclusive. Acemoglu and Robinson have an interesting account of the distinction between inclusive and extractive political and economic institutions. They define extractive political and economic institutions as those that benefit a few elite at the expense of society whereas inclusive political and economic institutions are those that have opposite properties to extractive ones. Extractive institutions are referred to as such because they are designed to extract incomes and wealth from one subset of society to benefit a different subset. It is not by default that the severity and intensity of corruption in Africa is so sharply high. To cut the long story short, take thirty minutes of your time and analyse countries that are poor now and those that are rich. You will notice an interesting fact, that the poor countries have embraced extractive institutions while the rich inclusive ones. African governments largely perpetuated institutions that were created by the colonial masters. Ironically, these colonial masters are still blamed until today after over 50 years that colonialism ended.
Africa is rich with young people that are tech savvy, vibrant and full of energy to make not only their families and themselves live decent lives, but make the continent to prosper. The questions is: will the infrastructure development "agenda" which seems to be supported by extractive institutions encourage the African youth to prosper in their quest to make a decent living and to contribute to the development of this continent? Not in the midst of corrupt practices and extractive structures of the economies. Consider this scenario; imagine a teenager in the US and South Africa in the Limpopo province. Those in the Limpopo province grow up in poverty, without entrepreneurial initiative, creativity or adequate education to prepare them for skilled work. Much of the education they receive at school is pure propaganda, meant to shore up the legitimacy of the regime; there are few books, let alone computers. Teenagers know that they will not be able to start businesses because there will be no funds to turn their idea into commercial opportunities, that the tender for a road project is reserved for a local politician and his or her cronies. Teenagers in the US obtain a good education and face incentives that encourage them to exert effort and excel in the chosen vocation. They have Silicon Valley that resource them to be entrepreneurial. They role model Bill Gates who started the business from a pure entrepreneurial thought while those in Limpopo role model a billionaire politician who benefited out of government contracts with proper procedures not being followed in some instances if not most. The difference between Bill Gates (US) and Carlos Slim (Mexico) is that the former thrived as an entrepreneur through an economy that created inclusive political and economic institution while the latter became the number one dollar billionaire in the world through an economy that created extractive political and economic institutions. It tells you the difference between North America and South America isn't it?
There's is not better time than now that African leaders realize such simple historical lessons and not be derailed by overoptimism of African continent as the last market frontier since the era of Industrial Revolution. China should not take advantage of the continent. It should be the other way round. It is not where the capital should come from, it is how the political process to react to this critical juncture that began in the first decade of the 21st century and create inclusive political and economic institutions that will propel this continent to prosperity until the turn of the 22nd century.
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